Day trading is not for the weak of character or of heart. There is a great need for discipline, resourcefulness, organization and character when it comes to day trading. It rewards those that are smart and well-put-together. It rewards those with the intuition to be able to make real money. When you place your first limit order, you need to be able to see ahead to what the trade is going to do.
Some say that online poker was a great training ground for successful day traders. The daily grind of sitting at online tables, searching for opportunities and marks, can mimic the hours of daily screen time that mark the days of the day trader. The adrenaline rush of putting all your days winnings on one hand that you see as a great chance to it it big is very similar to spotting a trending stock that is about to make real gains. The similarities are striking.
There are naturals in gambling and online poker, just as there are naturals in day trading. When you are rushing to get your money into the market, you are always looking for limit orders to keep your trades under control and out of the danger zone.
When you use the limit order strategy, you can place hundreds or even thousands of orders per day, with the caveat that a certain price must be met before the trade is executed. That is the nature of a limit order. With a buy limit order, you can place an order to buy a certain stock if the stock reaches a certain price. If it never drops to that price, the order will not execute. The same on the sell side. You can place a sell limit order, where you stipulate that you will sell a certain amount of share if a set price is hit, but the order will not execute if that price is not hit.
The main goal of a limit order over a market order is that the former pretty much guarantees entry into the market at a specific price. Limit orders are the best for day traders, because they provide protection from big swings in a highly volatile environment. Really, the primary risk of a limit order is that it is not filled at all. You can sit and place limit orders all day and most of them will never be filled. Those that are can be monitored for movement and you can make decisions accordingly.
The bid-ask difference is very important when it comes to limit orders. When you are young, it may be easy to forget that the ask price needs to be at the buy limit level and not the bid price. The market makers control the ask price. The sellers of the stock set the ask price. If you are smart enough to be able to anticipate the ask price and you set a buy limit order at that price, you will get your shares. Then it is up to you to sell them at the right time.